Corporate Law Update

This week Companies House, the FCA and the PRA each published their business plans for 2018-2019. We look at some of the key points in the plans, proposals by Companies House to secure better compliance with the PSC regime and an FCA paper on transforming culture in financial services.

Companies House to ramp up enforcement of PSC regime

Companies House has published its business plan for 2018-2019. The plan confirms that Companies House intends to take various steps to promote and ensure compliance with the regime for registering details of a company’s persons with significant control (the “PSC regime”).

The key points are as follows:

Companies House will contact companies which it believes may have misunderstood the requirements in the PSC regime in order to ensure that records are corrected and comply with legal requirements.

It will also pursue companies that have not provided PSC information in their confirmation statement or have not provided a statement of additional matters.

Companies House will follow up with companies and PSCs where a company has issued a notice to a PSC (asking him or her to provide information) or has imposed restrictions (because a PSC has failed to provide information) to ensure that companies update their records.

It will also seek compliance from companies where there has been a complaint about missing or incorrect PSC information. Companies House will seek compliance from companies and aim to respond to 95% of complaints within ten working days.

Companies House will develop data and intelligence sharing gateways with law enforcement and government departments to combat companies that deliberately provide false information or no information at all.

In 2019, Companies House will review the effectiveness of the PSC regime.

The business plan also states that, during 2018/2019, Companies House will work with the Government on:

potential changes to limited partnership law to address concerns about misuse of limited partnerships for fraudulent activities.

FCA calls for debate on transforming culture in financial services

The FCA has also published its business plan for 2018-2019. The plan notes that the FCA will need to continue to devote significant resources to Brexit, but it also identifies seven additional areas of focus: where there is the “greatest harm or potential for harm, and where intervention [by the FCA] can have the greatest impact”. These are:

Firms’ culture and governance

Financial crime (fraud and scams) and anti-money laundering

Data security, resilience and outsourcing

Innovation, big data, technology and competition

Treatment of existing customers

Long-term savings, pensions and intergenerational differences

High-cost credit

In connection with the first of these (culture and governance of firms) the FCA has collated 28 essays by industry leaders, academics, international regulators and change practitioners considering culture and behaviour in the financial services sector.

There is no proposed consultation on the paper; the FCA’s aim is, instead, to encourage all those with an interest in financial services to review the essays and debate the following issues in the hope of speeding up change in the sector:

What a good culture might look like.

The role of regulation and regulators.

How firms might go beyond incentives.

How to change behaviour for the better.

The PRA sets out its strategy for 2018-2019

In its business plan for 2018-2019, the PRA also notes that it will need to devote a large amount of its resources to ensuring a smooth transition to a “sustainable and resilient UK financial regulatory framework” post-Brexit and facilitating “an orderly UK withdrawal from the European Union”. In addition to this, the plan identifies the following strategic goals for the PRA:

Have in place robust prudential standards comprising the post-crisis regulatory regime.

Continue to adapt to changes in the external market and to hold regulated firms, and those who run them, accountable for meeting PRA standards.

Ensure that firms are adequately capitalised, and have sufficient liquidity, for the risks they are running or planning to take.

Develop supervision of operational resilience to mitigate the risk of disruption to the provision of critical economic functions.

Ensure that banks and insurers have credible plans in place to enable them to recover from stress events, and that the PRA has a credible resolution strategy to manage a firm's failure (proportionate to the firm's size and systemic importance) in an orderly manner.

Facilitate effective competition by actively considering the proportionality of the PRA’s approach as it contributes to the safety and soundness of the UK financial system.

Operate effectively by ensuring that resources are allocated to work that best advances the PRA’s strategy.